Federal Communications Commission FCC 13-26
STATEMENT OF
COMMISSIONER AJIT PAI
Re: Petition of GCB Communications, Inc. d/b/a Pacific Communications and Lake Country 
Communications, Inc. for Declaratory Ruling, WC Docket No. 11-141.
Incumbent local exchange carriers (ILECs) and intermediate carriers send long-distance calls 
from payphones to long-distance carriers, who then send these calls to their destinations.  In doing so, 
ILECs and intermediate carriers pass along “automatic number identification”—the unique fingerprint of 
a call, so to speak—including coding digits.  When someone places a call from a payphone, coding digits 
help identify that call as having been placed specifically from a payphone.  The question underlying 
today’s order is a bit technical and somewhat arcane:  If a long distance call is made from a payphone, is 
the long-distance carrier that completes the call responsible for compensating a payphone service provider 
if the ILEC or intermediate carrier fails to deliver the appropriate coding digits?  Our precedent says yes, 
as ably laid out in today’s order and the Wireline Competition Bureau’s declaratory ruling.  I agree, and 
am thus voting to approve this item.
Looming on the horizon is another question:  Does this identification-and-compensation scheme 
make sense anymore?  Common sense says no, for at least two reasons.  First, the requirement to transmit 
coding digits along with other automatic number identification is premised on the continued dominance of 
the public switched telephone network and the continued use of Signaling System No. 7 to set up calls 
over that network.  But the number of access lines is steadily declining.  And the network of the future—
indeed, the network of today for many providers—is based on the Internet Protocol (IP), which frees 
providers from the less efficient signaling mechanisms of the past.  As telephone operators transition their 
networks from time-division multiplexing to IP, the coding digit requirement is going to become 
increasingly burdensome and, many surmise, increasingly unlikely to work.
Second, the communications marketplace has changed dramatically since the Commission 
adopted the coding-digit requirement seventeen years ago.  Back then, incumbents dominated local 
markets and could reasonably expect to recoup from their customers the cost of upgrading and 
maintaining the equipment needed to comply with this requirement.  Now, incumbents face competition 
on all fronts and are mere middle-men in the transaction between completing carriers and payphone 
service providers, which renders outdated the one-sided, payphone-related regulatory burdens they face.  
Similarly, back then, most consumers had long-term relationships with their long-distance carriers, so if 
the coding digits did not transmit correctly, a carrier could bill its customer later for payphone use today.
1
  
Now, consumers increasingly use automatically decremented prepaid calling cards to make long-distance 
calls, so if the coding digits aren’t transmitted correctly, the provider cannot bill the customer for using a 
payphone—it’s now or never, as it were.
For these reasons, I hope we will soon consider revising our payphone compensation rules.  
Ensuring that payphone service providers are compensated for each and every completed call is not just 
fair, it is the law.
2
  To stay true to that command, we must accept that the IP transition is underway and 
adapt our rules to the realities of the modern marketplace.
                                                
1
Cf. J. Wellington Wimpy, Thimble Theatre (Mar. 20, 1932) (“I’ll gladly pay you Tuesday for a hamburger 
today.”).
2
See 47 U.S.C. § 276(b)(1)(A).